ABSTRACT
This chapter discusses the different types of financial markets available for those entities in need of funds, as well as the different types of securities used to raise funds. In this chapter, the controversial theory of market efficiency is discussed and how it can impact financial decision-making. It also discusses the different types of financial institutions that make up our financial system, including the Federal Reserve Bank. Numerous types of financial securities, from simple stocks and bonds to futures contracts and options, are discussed and differentiated. The term “beating the market” is defined mathematically using the Capital Asset Pricing Model.
